Penalty Policy Subcommittee - Tceq

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Penalty Policy Subcommittee

Issue Priority. 1

Key Issue Penalty Policy simplification:

A) Can the current Penalty Policy be simplified, and if so, how and whatare the costs and benefits of the simplification?

B) Should the penalty calculation exclude all self-reported violations ordeviations, as well as the notices of violation/enforcement covered in thecurrent case? Should the penalty calculation include all notices ofenforcement not preceded by a notice of a violation?

C) Should the Penalty Policy continue to take into account the compliancehistory of the respondent and the compliance history of the site?

D) Should the policy for penalty calculation adjustments be revised toaccount for investigations?

E) Should notices of violation issued by another entity or an agencycontractor be considered in the penalty policy?

Basis: Commissioner Input, Public Comment and Steering Committee Input

OtherSubcommitteesReviewing Issue

Compliance History Classification; Compliance History Use; EnforcementInitiation/Investigation Prioritization/NOV Policy

Recommendation In response to Key Issue A), the subcommittee determined that there are ways tosimplify the penalty policy in ways that will not be costly but instead could reducethe burden on staff resources, as described below. Key Issues B) through E) allquestion the use of specific components of the current compliance history formula.In response it is recommended that TCEQ eliminate double-counting in the PenaltyPolicy by eliminating the Compliance History Worksheet from page 2 of thePenalty Calculation Worksheet. Only a penalty adjustment based on the overallcompliance history classification of the respondent would remain. This partiallyaddresses Sub Issues B, C, D and E.

Further simplify the Penalty Policy by eliminating the potential and programmaticpenalty matrices. Replace the matrices with common categories for violationsacross all major program areas and standardizing the penalties for the mostcommon violations. Utilize a list of common categories of violations in guidanceto provide flexibility. The subcommittee addresses this alternative in Key IssueNo. 7 regarding mandatory minimum penalties.

Implications: • Simplification can erode adjustments built in to address specific policy

purposes, such as those for small business or small local governments.

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Basis: This is supported by public comments to only count factors once. Eliminating most of page 2 of the Penalty Calculation Worksheet will ensure an actor omission of a respondent is counted only once in the overall enforcementprocess.

Implementation Impacts:• Simplifying the Penalty Policy can be accomplished through the process of

promulgating the Penalty Policy in rule and incorporating the policies andchanges approved by the commissioners at the conclusion of theenforcement review.

• A rulemaking will include extensive stakeholder involvement and willinvolve staff resources.

• No effect on LBB performance measures.• EPA concerns can be addressed during the public participation component

of the rulemaking process.• Rulemaking can begin at the earliest at the conclusion of the agency

enforcement review in November 2004 with proposal in January 2005 andadoption by July 1, 2005.

• No statutory changes are required.• If the commissioners determine that promulgating the Penalty Policy in

rule is not appropriate, then the Penalty Policy itself can be changedthrough commission direction during Work Session.


Issue Priority. 2

Key Issue Recovering economic benefit through administrative penalties:

Should all or part of the economic benefit resulting from noncompliance beincluded in the penalty before adjustment for other factors as justice may require? If so, what is an equitable method to calculate economic benefit?

Basis: Commissioner Input, Public Comment, Steering Committee Input, StaffInput and Review of Current Policy, State Auditor’s Report.


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Recommendation Currently, the method used to develop economic benefit for delayed capital cost is:• EB = Interest saved + Onetime cost• Interest saved = (Item cost / Years of depreciation) X Years Delayed X

Annual percentage interest rate• Onetime cost = (Item cost / Years of depreciation) X Years delayed• EB is an upward penalty adjustment of the base penalty only when the

calculated benefit exceeds $15,000

The following are recommendations regarding alternative ways to treat economicbenefit in the Penalty Policy. Any combination can be selected:

Enhanced consideration of economic benefit• taking into account any cost of compliance in the calculation of economic

benefit received, which in some cases dwarfs any penalty amount• recover economic benefit of noncompliance rather than a percentage of

base penalty• remove the discussion of base penalty enhancement• re-word the penalty policy to define the types of benefit that will be

evaluated and require the benefit to be an add-on to the penalty amount upto the statutory maximum

• recover all or some part of the economic benefit (recovering “all” theeconomic benefit means recovering all that is permissible up to thestatutory amount allowed for the penalty)

Eliminate thresholds• remove the $15,000 criteria related to when economic benefit applies to a

case • recover economic benefit even if a penalty is mitigated due to inability to

payDifferentiate between size of a facility or magnitude of a violation• add the discretion to look at profit and / or to use EPA’s BEN Model to

calculate and estimate the economic benefit in complex and significantviolations

• recover all economic benefit only on cases with actual harm or egregiousviolations and recover something less than all economic benefit for othercases

• recover economic benefit only when the respondent is determined to be amajor facility as defined in the penalty policy

• develop a separate economic benefit policy for local governments thatmay include factors such as the size, type of source being operated, majoror minor source, etc.

Simplification• eliminate the depreciation value which is a more difficult concept to apply

in order to perform a simpler economic benefit calculation

Implications:• higher rate of no-settlement due to the increase in penalty• more orders issued with payment plans (and potentially a higher

percentage of cases with incomplete collections)• may be difficult to obtain financial information regarding how much

economic benefit a respondent realized• may be resource intensive to determine economic benefit

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Basis: See attachment following Penalty Policy Issue 12. It compares economicbenefit calculation in comparable states. The subcommittee considered theeconomic benefit policies of California, New York, New Jersey, Florida and theEPA. In general, the economic benefit analysis of other states is very similar toTexas, but the difference comes with what part of economic benefit should becollected. In some states all the benefit up to their statutory cap is collectedaccording to state policy with some minor exceptions, but further review revealsthat the policy is not consistently followed in the other states.

Some public comments which also suggest that the agency should be collecting allof economic benefit.

Implementation Impacts:• From the menu of choices or other sources, the commissioners would

determine the appropriate policies regarding economic benefit.• Implementation can be accomplished through the process of promulgating

the economic benefit policy in rule at the conclusion of the enforcementreview.







OtherAlternatives

Alternatives are presented in the main recommendation in a format much like amenu where any or all or a combination of alternatives can be chosen.

Notes No data exists regarding how often economic benefit is actually applied in a case,but staff estimates probably in less than 10% of all cases because the economicbenefit is either negotiated out of agreed orders or the amount does not exceed the$15,000 minimum. In cases where economic benefit does exceed the $15,000minimum, the recovery is usually less than $1,000 after deducting the $15,000minimum.

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Issue Priority. 3

Key Issue Penalty policy for small entities:Should small business and small local governmental entities, as well as smallnonprofit entities, be allowed a downward adjustment of a base penalty

Basis: Commissioner Input, Public Comment, Steering Committee Input, StaffInput and Review of Current Policy


Enforcement Initiation/Investigation Prioritization/NOV Policy

Recommendation Yes, it is recommended that TCEQ not create a completely separate PenaltyPolicy for small businesses and small local governments. However, it isrecommended that a penalty adjustment be used as a component of the PenaltyPolicy to result in reduced penalties for small businesses and small localgovernments.

However, a prohibition should exist so that a small business or small localgovernment cannot receive a penalty reduction if they have caused actual majorenvironmental harm or have a poor environmental record based on compliancehistory.

Small businesses should be defined consistently with other subcommitteesconsidering small business issues. It is recommended the definition includebusinesses with less than 100 total employees, independently owned and operatedand generating annual revenues of less than $1 million. Small local governmentsshould be defined as either a city with less than 10,000 population or a county withless than 50,000.

Recommend a penalty reduction component as follows:Small Business:Annual Gross Revenues $1 - $999,999 15%Small Local Municipal Government:Population 0 - 10,000 15%Small Local County Government:Population 0 - 50,000 15%Other Small Local Government:Located in a County with Population 0 - 50,000 15%

Additionally, the implementation of this policy should include flexibility so thatthe Commission will have the discretion to adjust the 15% reduction either upwardor downward based upon unique financial circumstances or the nature of theviolation. For a small local government a penalty may be partially or completelydeferred in exchange for a commitment to expend the money to addresscompliance issues.

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Implications:• penalty savings could be used for compliance costs• less repeat violations since poor compliance history may result in no

penalty reduction• enforcement staff may need to review information provided by the

respondent regarding annual revenues, population and local governmentwealth.

Basis: Public comments generally support different penalties for small business,though the comments are less supportive of different penalties for small localgovernments.

Counties and municipalities face unique constraints in complying withenvironmental requirements. For the following reasons, the subcommitteeconsidered a larger penalty reduction for small local governments than for smallbusinesses:• public financing is typically more cumbersome than for private sector

entities• municipal functions can trigger large environmental obligations, which

may overwhelm county or municipal tax bases• some services provided by a county or municipality are essential and must

often continue to operate (e.g. provision of water and sewer service).

Implementation Impacts:• Implementation can be accomplished through the process of promulgating

the small business and small local government policies in rule at theconclusion of the enforcement review.







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OtherAlternatives

TCEQ could consider including in the definition of small governmental entity anentity less wealthy than state averages as measured by either median householdincome or poverty levels (one of the two).

TCEQ could consider reducing penalties further for less wealthy small localgovernments.

The subcommittee considered but rejected a recommendation for small businessesincluding:• emission limits – difficult to set for all media (but would weigh

environmental impact)• limit to only “not-for-profit” entities – would exclude water supply

corporations• exclude publicly held entities – not necessarily a measure of size or

revenues

Notes In FY 2003, small business, small city, small county, or small public watersystems accounted for 641 commission orders issued while larger entitiesaccounted for 351 commission orders. Of the 641 commission orders issuedagainst smaller entities, small business alone accounted for 531. Therefore, anychange to policy relating to small business and small local governments will affectapproximately 65% of all orders issued.

Numerous definitions of small business can be found in federal statute, statestatute and state rule, and include number of employees from less than 100 to lessthan 250, independent ownership and operational control, for profit status,maximum revenue threshold of $1 million to $3 million, whether it is dominant inits field and whether it is a major source. Small local governments are identifiedby virtually all sources by population, many using 10,000 for small cities and50,000 for small counties.

Small business and small local governments generally have smaller penalties, soany percentage of reduced penalties will not be as significant in dollar amounts ascompared to larger entities. Even with smaller penalty amounts in terms ofdollars, the deterrent effect on the smaller entity is on par with a much larger dollaramount for a lager entity.

Texas population data shows that 87% or 1,270 cities are under 10,000 inpopulation, 2/3 of which are less than 3,300 in population. 199 of the 254 countiesin Texas, or 78% have less than 50,000 in population. Every TCEQ region exceptfor DFW, Houston and Harlingen had over 60% of their counties listed as rural.

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Issue Priority. 4

Key Issue Deterrence through penalties:Are the penalties assessed effective in deterring violations?

Basis: Commissioner Input, Public Comment, Staff Input and Review of CurrentPolicy.


Recommendation The enforcement process and system as a whole, not solely the Penalty Policy,must be working properly in order to serve as a deterrent. If the objectives of theoverall enforcement review are met, the deterrence benefit will be increased. Forthis reason, recommendations regarding the Penalty Policy will not in themselveswholly address the deterrence issue.

The Penalty Policy can be strengthened to improve the deterrence factor in thefollowing ways:• Add language to the Penalty Policy expressly discussing deterrence as a

goal of enforcement. Example language from New York’s penalty policy (pages 2-3 (emphasisadded)): The primary purpose of the policy is to articulate the[Commission’s policies for assessing and collecting penalties in a mannerthat will assist [the Commission] in efficiently and fairly deterring andpunishing violations and to provide the public with an understanding of[Commission] policy in this area. This policy is intended to send amessage to regulated entities that [the Commission] has the will andcapability to obtain penalties which are sufficiently high to deterviolations by individuals, companies, and public agencies.”

Example language from Florida’s penalty policy (pages 2-3): In assessingpenalties, the Commission “will not only look at the statutoryauthorizations and requirements, but also at the following: doesenforcement result in the elimination of any economic benefit gained bythe violator as a result of the violation: and beyond that, does enforcementprovide enough of a financial disincentive to discourage future violationsnot only from the violator but from others contemplating similaractivities?” “The use of penalties is an enforcement tool that should beused in any case in which it is determined that penalties are needed toensure that the responsible party and others similarly situated are deterredfrom future non-compliance.”

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Additionally, the following recommendations address deterrence:• pursuant to Key Issue 7, assess mandatory minimum penalty for each

occurrence of significant non-compliance• for repeat violators, eliminate downward adjustments of the base penalty

for good faith efforts to comply, compliance history or any other factor• track enforcement data to measure the level of deterrence achieved from

future enforcement program improvements, using measures such aspercentages of repeat violators or changes in particular types of violations

Basis: Deterrence of future violations is a long-recognized goal of penaltyassessment. Texas Water Code § 7.053(3)(E) expressly provides that inconsidering the amount of a penalty the commission shall consider the amountnecessary to deter future violations. The need for compliance incentives in theenforcement process must be balanced with the need for deterrence through theassessment of effective penalties.

The assessed penalty did not deter future violations by the same entity for 17% ofthe regulated entities that were issued orders in FY 1999. Data provided by theEnforcement Division shows that there were 829 regulated entities with ordersissued in FY 1999. Of these 829, 269 received either NOEs or NOVs in thesubsequent period of 2000 to present. This represents a 32% rate of recidivistviolations.

Including only NOEs in the calculation may be a better measure of recidivism. Ofthe 829 regulated entities with orders issued in FY 1999, 142 received eitherNOEs in the subsequent period 2000 to present. This is a 17% rate of recidivistviolations. * This evaluation is likely conservative since it doesn’t include any data prior toFY 1999. It also doesn’t consider that entities that received an initial violationafter 1999 may have had a subsequent violation and therefore be a recidivistviolator.

In addition, the FY 2003 Enforcement Report indicates that “Of the 992 Ordersissued [in FY 2003] regarding 964 regulated entities, 172 (17.8%) of the regulatedentities had previous enforcement.”

The assessed penalty did not deter future violations by the same entity for 17% ofthe regulated entities that were issued orders in FY 1999. On the flip side, 83% ofthe entities with violations in FY 1999 did not have an NOE during the subsequentperiod FY 2000 to date in FY 2004.

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Implementation Impacts:• Including an express statement regarding the goal of deterrence can be

accomplished during the process of promulgating the Penalty Policy inrule at the conclusion of the enforcement review.





• No statutory changes are required.• In order to ensure the Penalty Policy is effective in deterring

noncompliance, a detailed analysis should be included in the annualenforcement report describing factors to determine whether deterrence isachieved.

• If the commissioners determine that promulgating the Penalty Policy inrule is not appropriate, then the Penalty Policy itself can be changedthrough commission direction during Work Session.

Notes Fraud deterrence hinges on the “perception of detection” according to JosephWells - founder of the Association of Certified Fraud Examiners. People whobelieve that they will be caught are less likely to offend. Furthermore, Wellsindicates that many experts believe that punishment is of little value in deterringcrime because the possibilities of being punished are too remote in the mind of thepotential perpetrator. Wells give the illustration that when someone is about to dowrong, the first thing that comes to their mind is “will I get caught?” not “what isthe punishment if I do get caught?” If they answer yes to the first question, theyare not likely to commit the offense. According to this argument, the punishmentis moot as a deterrent regardless of how severe it is. With this logic, to deterwrongdoing, an enforcement system should focus on increasing the perception andreality of catching wrongdoers rather than solely on the penalty.

Elements of an effective enforcement system:• strong proactive policies/laws and an awareness/education program• increased oversight, including analytical data reviews and surprise

audits/inspections• adequate reporting programs - allow and encourage employees/citizens to

report suspicious activity• consistently enforce policies/laws• after detection of wrongdoing, take all reasonable steps to appropriately

respond to the offense and to prevent further similar offenses includingpunishment

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Issue Priority. 5

Key Issue Promulgation of Penalty Policy by rule:Should the Penalty Policy be adopted as a rule in whole or in part, andsupplemented with a single guidance document encompassing all internalguidance and internal memos?

Basis: Public Comment


Recommendation Promulgate Penalty Policy in rule, and supplement with guidance, maintainingenough flexibility for commissioner discretion. This recommendation is closelyrelated to Key Issue No. 7 relating to mandatory minimum penalties and Key IssueNo. 12 relating to joint and several liability.

Benefits:• strength at a SOAH hearing on recommendation if Penalty Policy is in rule

rather than policy• settles more non-contested cases because in following a rule, there is less

room to negotiate• saves resources with less room to negotiate• more uniform recommendations and decisions• the rulemaking through the Administrative Procedures Act will provide a

transparent, reasoned justificationCons:• inflexible• hard to change• takes discretion from ED and commissioners• very involved rulemaking which will take administrative resources

Basis:When first developed the Penalty Policy was intended to function for a period oftime and then be adopted in rulemaking with lessons learned from implementation. This was over 7 years ago.

Implementation Impacts:• A rulemaking will include extensive stakeholder involvement and will

involve staff resources.• No effect on LBB performance measures.• EPA concerns can be addressed during the public participation component



• No statutory changes are required.

OtherAlternatives

Do not promulgate penalty policy in rule, but rather only use it as a guide forsettlement of agreed orders. For cases which are not settled, recommend thestatutory maximum to the SOAH judge.

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Notes During the rulemaking process, special attention should be given to ensuring thedefinitions of “major” and “minor” sources in the Penalty Policy are consistentwith those definitions in permitting requirements.


Issue Priority. 6

Key Issue Consideration of a respondent’s pollution control investment:Should investment in pollution prevention technology be used as a factor incalculating penalties for violations or economic benefit while operating innoncompliant status?

Basis: Steering Committee Input


Recommendation Currently, no consideration is given to investment in pollution control equipmentnot mandatory under a regulatory requirement. The subcommittee does notrecommend a change to current policy in regard to this issue.

Implications: Consideration of investment adds complexity, and also may lead todouble-dipping if an entity receives a favorable tax credit for pollution controlequipment and potentially the generation of offset credits.

Implementation Impacts: N/A

OtherAlternatives

The commissioners can accomplish the same results by utilizing general authorityto set a penalty based on as justice may require.

Notes This issue involves implementing controls in addition to those required after anNOE is issued for a violation. This has actually been an issue 3 times in the last10 years that staff is aware.

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Issue Priority. 7

Key Issue Mandatory minimum penalty for each occurrence of significant noncompliance:

A) Should a mandatory minimum penalty be required for each occurrenceof significant noncompliance?

B) Should statutory administrative penalties be equalized across programsto provide for consistency, including lowering penalties for small entities?

C) Does the penalty policy equitably account for and make a distinctionbetween harm to the environment and a “paperwork” violation?

Basis: Commissioner Input, Public Comment, Steering Committee Input, StaffInput and Review of Current Policy


Enforcement Process

Recommendation Simplify the Penalty Policy by eliminating the “Potential Release” from theappropriate environmental / human health / property matrix, and calculateviolations for “Potential Release” with common categories for violations across allmajor program areas, standardizing the penalties for the most common violations. Consistent with Key Issue No. 5 regarding a rulemaking for the Penalty Policy,utilize a list of common categories of violations in guidance to provide flexibility. The subcommittee references this recommendation in Key Issue No. 1 regardingsimplification.

The subcommittee has provided a recommended list intended to serve as guidance(see attachment following this key issue table) for penalties related to commonviolations, and the subcommittee recommends changing the environmental /human health / property matrix as follows:

Harm Level: Major Moderate MinorRespondent: Major/Minor Major/Minor Major/Minor Actual Release 100% / 75% 75% / 50% 50% / 20%

Pros:• shorter, consistent, easier for stakeholders not familiar with the agency to

understand their penalty• the list promulgated in guidance can address Sub Issues A (significant

noncompliance), B (equalized penalties) and C (harm to the environment)Cons:• draconian, no flexibility, and changes precedenceOther:• affects 60% to 70% of all cases, and may significantly lower penalties

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Basis: The answer to Sub Issue A is that current policy does require mandatory minimumpenalties. However, the recommendations above further supports the concept ofmandatory minimum penalties.

The answers to Sub Issue B regarding equalized penalties and Sub Issue Cregarding “paperwork” violations are both inherently “yes” in therecommendations made above.

In raising the mandatory minimum penalties for significant noncompliance as analternative recommendation above, deterrence is furthered and penalties areincreased on larger violations with more impact.

In developing the recommended guidance, staff researched the most commonviolations for major program areas and divided the violations into commoncategories and then assigned a standard penalty amount for each category as apercentage of the statutory limit for major and minor sources. Any documentedviolation falling within a proposed category would receive the penalty amountassociated to that category. Examples of certain violations in air, water and wastemedia have been provided in the Standard Penalty Table attached after PenaltyPolicy Issue 12. This illustrates violations that would fall within each category. Where it is appropriate to include more than more than one count for a violationtype, the type of count suggested is noted. It is recommended that the proposedpenalty for each category is not factored against a unit of time, as respondents maybe adversely affected depending on the date the investigator conducts theinvestigation or the enforcement screening date.

Implementation Impacts:• Implementation of mandatory minimum penalties can be accomplished

through the process of promulgating the Penalty Policy in rule at theconclusion of the enforcement review.







OtherAlternatives

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Notes The subcommittee reviewed the TxPIRG report issued in May 2004 entitledMandatory Minimum Penalties, An Effective Tool For Enforcement of CleanWater Laws. The subcommittee concluded that even though the report does notmention Texas, the TCEQ in concept already agreed with the conclusions bycreating mandatory minimum penalties in the current penalty policy in the penaltymatrices for major harm.


Issue Priority. 8

Key Issue Partial credit for corrective actions:Should a partial good faith adjustment in a penalty calculation be allowed based oncompletion of some but not all required corrective actions?



Recommendation It is recommended that TCEQ change the current Penalty Policy to allow creditfor partial corrective actions. Under the current policy, no partial credit is givenfor good faith effort to comply unless all of the violations are completely resolved.

For example, allow an entity with ten violations which corrects six violations priorto an NOE credit for the six corrected violations rather than no credit because allviolations were not completely resolved. However, the act of ordering equipmentto come into compliance would not be considered correcting a violation.

Include a caveat to exclude partial good faith reductions in cases involvingculpability, repeat violators and where no capital outlay is involved.

This recommendation could be implemented by revisions to the Penaltycalculation Worksheet (PCW).The current table on the summary page would bereplaced with a new table used to evaluate each violation. If compliance has beenachieved before the NOV/NOE is issued, the EC will recommend a 30% reductionon the violation. If compliance was achieved after the NOV/NOE, the EC willthen recommend a 20% reduction.

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The Enforcement Coordinator would explain the type of corrective action that therespondent took and when the corrective action was taken. For example: “Respondent achieved compliance on Date. Specifically, the respondent has....”. Or: “Respondent has taken the necessary steps to come into compliance. Specifically, the respondent has....”. If the respondent is not in compliance andhas taken no steps to do so, the EC will simply state: “There is no documentationthat the respondent has taken steps to come into compliance.”

This new method would not give good faith effort credit for one time violationswithout the opportunity to comply. Such violations include but are not limited tothe installation of a system at a site where either the installer or the system was notpermitted or authorized at the time or where fuel was delivered and deposited intoa UST system with no delivery certificate at the time.

Basis:Advantages of Recommended Good Faith Effort Procedure:• makes the calculation of GFE simpler for ECs• removes the ‘extraordinary’ and ‘ordinary’ Quality criteria. Instead, the

EC will only determine if the respondent is either completely incompliance or has taken steps to do so

• still gives credit based on timeliness, i.e Before NOV/NOE and afterNOV/NOE

• takes into consideration respondents who may not fully be in compliancebut have addressed some of the identified violations

Implementation Impacts:• Allowing partial credit for corrective actions can be accomplished through

the process of promulgating the Penalty Policy in rule at the conclusion ofthe enforcement review.







OtherAlternatives

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Issue Priority. 9

Key Issue Use of deferrals in case settlements:

A) Should deferrals continue to be offered and if so, in what situations?

B) Are expedited settlements or an expedited deferral appropriate whenthe penalty calculation includes an upward adjustment due to culpability?

Basis: Commissioner Input, Public Comment and State Auditor’s Report.


Enforcement Process

Recommendation Eliminate granting penalty deferrals.

Basis: Deferrals do not necessarily speed up settlement under current practicewhere a respondent has 60 days (after a proposed order is sent) to sign the order inexchange for a 20% deferral. This is a practice, but not addressed in the currentPenalty Policy. Respondents take deferrals in about one-half of the cases in whichdeferrals are offered.

Implementation Impacts:• Since deferrals are not written in the current Penalty Policy but rather are

offered as a matter of agency practice, no implementation is required foreliminating deferrals.

OtherAlternatives

Expressly provide in the Penalty Policy that deferrals are an option in every case,including those involving culpability. The current Penalty Policy only includesdeferrals for first time offenders and precludes deferrals in situations involvingculpability.

Notes The Enforcement Process Subcommittee is considering ways to shorten the time ittakes for an enforcement action, and has related recommendations to providemonetary incentives in return for expedited agreement to the order and penalties.

May slightly increase revenue to the state’s General Revenue Fund.


Issue Priority. 10

Key Issue Penalties in default orders:

In a penalty calculation included in a default order against a respondent, shouldpenalties be increased?

Basis: Commissioner Input and Public Comment

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Enforcement Process

Recommendation Yes, additional penalties should be included in default orders. Additional penaltiesshould be assessed in two circumstances:

1) an instance of cases when a respondent does not reply to the enforcementpetition (“no answer default orders”); and2) an instance when the respondent answers the petition requesting a hearing butthen does not show up when the preliminary or evidentiary hearing on the matteris convened by SOAH (“answer default orders”).

Implications:• encourages Attorney General to pursue higher penalties from higher

default orders• knowledge of the policy change and renewed agency efforts to collect past

due penalties my result in less default orders

To avoid recalculating a penalty prior to Agenda setting, and because of noticeissues, it may be necessary to include in the petition a caveat that if the respondentfails to answer, then the penalty is automatically increased and entered as adefault. . A similar warning could also be provided in correspondence associatedwith setting a hearing.

Basis: Currently, penalties in very few default orders are ever collected. Concernshave been raised regarding the expenditure of TCEQ and SOAH resources toprovide the hearing opportunity to respondents who do not act in good faith ormay seek to obstruct the process provided by the state. This recommendationprovides further deterrence in the enforcement process.

Implementation Impacts:• Increasing penalties in default orders can be accomplished through the

process of promulgating the Penalty Policy in rule at the conclusion of theenforcement review.

• Proposed orders mailed to respondents will need to be changed to accountfor a higher penalty in cases where a default is entered as opposed to whenthe respondent answers the Notice of Enforcement.







OtherAlternatives

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Notes The Collections Subcommittee provides recommendations for use of collectionagencies to collect delinquent fees and penalties owed to the State.

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Issue Priority. 11

Key Issue Cases with low penalty amounts:Should TCEQ decline to pursue a penalty in enforcement cases where agencyresources could be better applied elsewhere, for example in cases with a deminimis fine?

Basis: Commissioner Input and Public Comment


Recommendation It is recommended that existing policy remain in place and no changes arerecommended.

Basis: • mandatory minimum may be required in certain cases• the agency has in the past issued orders with no penalty, only corrective

action, and currently has the discretion to do so under current policy andpractice

Implementation Impacts: N/A

OtherAlternatives


Issue Priority. 12

Key Issue PST certification and fuel distribution violations:Should the Penalty Policy make special provisions for petroleum storage tank(PST) certification and fuel distribution violations, including guidance on whetherand to what extent both the owner and operator are responsible?



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Recommendation Clarify through rulemaking the current commission practice regarding the legalability and current policy of imposing joint and several liability for differentrespondents responsible for the same violation. This recommendation is closelyrelated to Key Issue No. 5 regarding promulgating the Penalty Policy in rule.

Implications:• provides clear direction to Administrative Law Judges and results in

consistent PFDs• provides clear Commission policy to give respondents notice of the basis

upon which agency decisions are made

Basis: Current commission practice is to utilize one penalty calculation worksheetfor each violation and impose joint and several liability in cases where there is arelationship among respondents, such as a familial or business relationship. Underjoint and several liability, one penalty for a violation is imposed, and every personresponsible for the violation is liable for full payment of the penalty, although theliability is extinguished for all parties when the full penalty amount is paid.

Recent PFDs have not always been consistent in whether the agency possesses theability to impose joint and several liability, or alternatively, the PFDrecommendations do not consistently impose joint and several liability.

Joint and several liability is not addressed in either the penalty policy or inguidance. The Commissioners rely on practice, which is currently to impose jointand several liability based on authority from 7.051, Water Code, which allows anadministrative penalty against a responsible “person.”

Implementation Impacts:• Providing for more standard penalties for PST violations and clarifying

joint and severable liability for respondents can be accomplished throughthe process of promulgating the Penalty Policy in rule at the conclusion ofthe enforcement review.







OtherAlternatives

Notes It is important to note that joint and several liability for administrative penaltiesand joint and several liability for corrective action are separate and distinct parts ofsome PFDs and enforcement actions.

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Penalty Policy Issue 2 Attachment A

State Penalty Policies - Comparison of Economic Benefit Components

State DelayedCapitalCosts

Delayed One-Time

Expenditures

AvoidedPeriodic Costs

CompetitiveAdvantage

Interest Profit De Minimis Benefits

Compelling PublicInterest

LitigationPracticalities

Texas X X X1 1 2 2 2

New York X X X X X X X

New Jersey X X X X X X 3 3 3

Florida X X X X X

California X X X X X 4 X

EPA-BEN Model X X X X X X X

Note: Non-bolded columns headers indicate benefits of settlement.

1 Considered in determination of whether a respondent has gained an economic benefit.2 In Texas, may be included in “Other factors as justice may require.” In New Jersey, could be included in “Any other benefits resulting from the violation.”3 May be considered as part of “any other factors relevant to economic benefit.”4 California’s “Interest Factor”, also referred to as Interest Rate, allows the violator to benefit by:

(1) earning interest on the funds that should have been spent on compliance, (2) increasing profits by investing the funds back into the business, and (3) avoiding the expense of interest, if the business would have had to obtain a loan to pay the cost of compliance. The “interest factor”may be a consolidation

of multiple interest rates where the interest rate changed during the period of violation.

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Texas:Economic benefit is defined as monetary gain derived from a failure to comply with TCEQ rules or regulations. Economic benefit may include any orall of the following: (1) the return a respondent can earn by delaying the capital costs of pollution control equipment;(2) the return a respondent can earn by delaying a one-time non-depreciable expenditure; and(3) the return a respondent can earn by avoiding periodic costs.

Benefits from delayed costs potentially arise when a violator delays expenditures necessary to achieve compliance. Avoided costs are expenses that aviolator would have incurred if the facility had complied with environmental regulations on time, and which can never be made up. To determine whethera respondent has gained an economic benefit (during the alleged violation period), staff must evaluate the following issues for each violation:1. Did the respondent avoid or delay capital outlay for item(s) specifically required by a permit or rule that is applicable to the facility or unit in

question?2. Did the respondent gain any interest by avoiding or delaying capital outlay for item(s) specifically required by a permit or rule that is applicable

to the facility or unit in question?3. Did the respondent gain an economic advantage over its competitors?4. Did the respondent avoid or delay disposal, maintenance, and/or operating costs?5. Did the respondent receive increased revenue due to noncompliance?6. Did the respondent avoid the purchase of financial assurance for item(s) specifically required by a permit or rule that is applicable to the facility

or unit in question?

If the answer is “yes” to any of these questions, then staff will estimate the overall economic benefit gained. Only capital expenditures, one-timenondepreciable expenditures, periodic costs, and interest gained will be evaluated in the calculation of economic benefit.

Once the economic benefit has been estimated and totaled for all violations included in the enforcement actions, it should be compared to the followingcriteria, and the penalty amount will be increased accordingly. The economic adjustment factor will be capped so the adjustment amount does not exceedthe economic benefit gained.

Economic Benefit Matrix

% Adjustment Dollar Range of Benefit

None Less than $15,000

50% Equal to or greater than $15,000

Other factors that justice may require: The staff may recommend adjustment of the penalty amount, on a case-by-case basis, upon a consideration offactors unique to the situation. This adjustment may result in an increase or decrease of the penalty amount. The current penalty policy does not expresslylimit which factors may result in an increase or decrease.

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New York:The benefit component is an estimate of the economic benefit of delayed compliance, including the present value of avoided capital and operating costsand permanently avoided costs which would have been expended if compliance had occurred when required. The benefit component should also includeany other economic benefits resulting from noncompliance, such as avoided liquidated damages under contracts and enhanced value of business or realproperty. In appropriate cases, the DEC may use the EPA computer program known as BEN to calculate and estimate the economic benefit ofsophisticated and significant violations.

There are three cases where adjustments may be appropriate. The DEC in its discretion may refuse to consider these benefit component adjustments ifthe respondent does not supply sufficient and credible documentation of the relevant matter.

1) De Minimis Benefits - The commitment of significant DEC resources may not be warranted in cases where the magnitude of the benefitcomponent is insignificant. In such matters, DEC enforcement staff has the professional discretion not to seek the benefit component of thepenalty.

2) Compelling Public Interest - In the exercise of discretion, the DEC attorney, in consultation with Regional and/or Program Directors, may reduceor suspend payment of the benefit component of the penalty where the public interest would not be served by taking the penalty action to fulladjudicatory hearing. In such cases, it may be necessary to settle the case for less than the benefit component. Such settlements may beappropriate in the following circumstances: removal of the economic benefit would result in plant closure, bankruptcy, or other extreme financialburdens, and there is public interest in allowing the firm to continue in business; in enforcement actions against not-for-profit public entities suchas municipalities,the circumstances might include situations where assessment of the civil penalty threatens to disrupt continued provision of essential publicservices. In situations where a plant is likely to close anyway, or where there is a likelihood of continued harmful non-compliance, the fulleconomic benefit should be recovered.

3) Litigation Practicalities - The exercise of prosecutorial discretion by the Department’s professional staff is a critical component of this Policyand is to be applied in all cases to determine a proper resolution.

The ability to pay is also considered as one of the adjustments to gravity component of penalty determinations, as well “unique factors” or factors notanticipated in existing penalty guidance.

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New Jersey:For water quality and certain hazardous substances, economic benefit shall include:1. The amount of savings realized from avoided capital or noncapital costs resulting from the violation;2. The return earned or that may be earned on the amount of the avoided costs;3. Any benefits accruing to the violator as a result of a competitive market advantage enjoyed by reason of the violation; and4. Any other benefits resulting from the violation.

The Department shall consider the following factors in determining economic benefit:• The amount of capital investments required, and whether they are one-time or recurring• The amount of one-time nondepreciable expenditures;• The amount of annual expenses;• The useful life of capital;• Applicable tax, inflation and discount rates;• The amount of low interest financing, the low interest rate, and the corporate debt rate; and,• Any other factors relevant to economic benefit.

If the total economic benefit was derived from more than one violation, the total economic benefit may be apportioned to an amount no greater than$50,000 per violation. However, for the Air Enforcement Program, the Department may, in addition to any other civil administrative penalty assessedpursuant to this subchapter, include as a civil administrative penalty the economic benefit (in dollars) which the violator has realized as a result of notcomplying with or by delaying compliance with the requirements of the Act, or any rule, administrative order, operating certificate or permit issuedpursuant thereto.

For Solid and Hazardous Waste Programs, the Department may, in addition to any other civil administrative penalty assessed pursuant to this subchapter,includes as a civil administrative penalty the economic benefit (in dollars) which the violator has realized as a result of not complying with or by delayingcompliance with the requirements of the Act, or any rule promulgated, any administrative order, permit, license or other operating authority issued, orany Part A permit application filed, pursuant to the Act. If the total economic benefit was derived from more than one violation, the total economic benefitmay be apportioned among the violations from which it was derived so as to increase each civil administrative penalty assessment to an amount no greaterthan $50,000 per violation.

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Florida:Florida distinguishes between passive and active economic benefits. Passive economic benefits usually consist of the money that was made or that couldhave been made by an alternate use of the money that should have been expended to bring the facility into compliance. Active economic benefits usuallyconsist of any increase in profits or reduction in costs that are directly attributable to the activity conducted in violation of Department statutes or rules.

Florida uses the EPA Civil Penalty Policy approach historically (the Ben Model), as per the 1990 and now the revised 2003 Civil Penalty Policy. Thelower limit for consideration was $2,500 and now that is $3000. Florida’s Environmental Litigation Reform Act (ELRA), enacted in the 2001 legislativesession, sets specific penalty amounts for certain violators covered under the Act when those violations are pursued with a Notice of Violation. Independent of ELRA, the Department has statutory authority to assess administrative penalties in Beaches and Coastal Systems, RCRA, UIC, asbestoscases and State Lands cases for up to $10,000 per day. Penalty guidelines for these programs have been adopted by rule.

For non-ELRA cases, the statute provides that a penalty should be calculated in an amount sufficient to ensure future compliance. It is therefore theDepartment’s policy to ensure future compliance by eliminating as much of the economic benefits of non-compliance as the statute will allow by addingthe economic benefits of non-compliance, where appropriate and practical, to all civil penalty calculations.

Two other economic benefit considerations are‘ability to pay’, which may be used to decrease the amount of penalties derived from the ERLA schedule,and ‘other unique factors’, which is intended to provide the District (i.e., Regional Office) with the flexibility to make adjustments in a particular casebased upon unique circumstances that do not clearly fit within the other adjustment factors.

California:The only California environmental law that specifically requires the recovery of economic benefit is in the Water Code: “In determining the amount of any liability imposed under this section, the regional board, the state board, or the superior court, as the case may be, shalltake into account the nature, circumstances, extent and gravity of the violation or violations, whether the discharge is susceptible to cleanup or abatement,the degree of toxicity of the discharge, and, with respect to the violator, the ability to pay, the effect on its ability to continue its business, any voluntarycleanup efforts undertaken, any prior history of violations, the degree of culpability, economic benefit or savings, if any, from the violation, and othermatters that justice may require. At a minimum, liability shall be assessed at a level that recovers the economic benefits, if any, derived from the acts thatconstitute the violation.

Also, California’s Department of Toxic Substances Control, Hazardous Waste Management Program, has developed a guidance document entitledGuidelines for Calculating the Economic Benefit of Noncompliance. This document is based on regulations which require that “a violator should notbenefit economically from noncompliance, either by avoiding or delaying costs or gaining a competitive advantage”. Administrative penalties includethe amount of any economic benefit gained or cost of compliance avoided by the violator as a result of noncompliance, up to the statutory maximum foreach violation. Economic benefit includes, but is not limited to, avoided costs, increased profits or avoided interest. Economic benefit also includes theuse of capital from delayed or avoided costs.

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EPA-BEN Model :This model identifies two types of economic benefit from noncompliance in determining the economic benefit component - benefit from delayed costs,and benefit from avoided costs. Since 1984, it has been Agency policy to use either the BEN computer model or “the rule of thumb” approach to calculatethe economic benefit of noncompliance. The rule of thumb approach is a straightforward method to calculate economic savings from delayed and avoidedcompliance expenditures. Enforcement personnel may use the rule of thumb approach whenever the economic benefit penalty is not substantial (generallyunder $10,000) and use of an expert financial witness may not be warranted.

For economic benefit penalties that are more substantial (generally more than $10,000), enforcement personnel should use the BEN model to calculatenoncompliance economic benefits. The primary purpose of the BEN model is to calculate economic savings for settlement purposes. The model canperform a calculation of economic benefit from delayed or avoided costs based on data inputs, including inputs that consist of optional data items andstandard values already contained in the program.

This model indicates that for certain (RCRA) requirements, the economic benefit of noncompliance may be relatively insignificant (e.g., failure to submita report on time). In the interest of simplifying and expediting an enforcement action, enforcement personnel may forego the inclusion of the benefitcomponent, where it appears that the amount of the component is likely to be less than the applicable amount show in the chart below for all violationsalleged in the complaint.

When the penalty is gravity-based and multi-day, total penalty is: Economic benefits of noncompliance should be pursued if it totals:

$30,000 or less at least $,3000

$30,001 to $499,999 at least 10% of the proposed penalty

$50,000 or more $5,000 or more

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Penalty Policy Issue 7 Attachment A

Standard Penalty Table

Category Example violations

Falsification100%

Falsification data or other information in order to deceive agency or public.

Registration,Reporting,Certifications, andNotification10%

Failure to submit required reports, deed recordation, certifications and notifications to the agency andothers. Failure to register or accurately register equipment, sites, etc. as required by the agency.

AirFailure to submit Title V certification or emissions event noticeFailure to submit deviation reportsFailure to submit emissions inventoryFailure to submit federal notice of compliance reports or compliance banking report not submittedFailure to submit sample resultsFailure to submit complete or inaccurate reportFailure to report deviations on Title V certificationFailure to provide all elements on emissions event report

WaterFailure to submit engineering and financial planning for 75/90 capacityFailure to report exceedances that are greater than 40% of permit limitFailure to submit required monthly, quarterly, and annual reports, accurate reports, or complete reportsFailure to notify media when reporting a bypassFailure to submit discharge monitoring report (DMR), accurate DMR, or complete DMR Failure to correctly report flow and effluent parametersFailure to provide noncompliance report (oral or written)Failure to provide notification on alterations where no permit is requiredFailure to submit pollution prevention planFailure to submit plans and specs and obtain approval prior to construction of a public water supplyFailure to provide required public notificationFailure to submit well completion data to public drinking water programFailure to obtain new maintenance contract for on-site sewage facilities (OSSF)Failure to submit site evaluation with planning materials in OSSFFailure to notify permitting authority of the date construction is to begin in OSSFFailure to request all required inspections in OSSFFailure to notify agency of any sensitive features encountered during construction in Edwards Aquifer Failure to obtain required registrationFailure to submit Notice of Intent (NOI)Failure to correct inaccurate information on NOIFailure to renew pretreatment agreementFailure to obtain a certificate of convenience and necessityFailure to file an approved tariff with the agencyFailure to file a sanitary control easement


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WasteFailure to submit annual waste summaries.Failure to provide required notification of confirmation sampling events to region offices.Failure to provide notice to affected property owners for Affected Property Assessment Reports.Failure to provide construction notification of PSTsFailure to report required releases and spills to the agency.Failure to provide required written notification of Stage II system installation or testing.Failure to obtain an EPA ID numberFailure to notify of one or more waste streams, waste management units or other incomplete or inaccurateinformation for the Notice of RegistrationFailure to register existing, new or removed PSTs.Failure to update changes or additional information to the PST registrationFailure to fully and accurately complete the PST registration and self certification formsFailure to register used oil or tire recycling activities.Failure to submit required certification of compliance with order provisions.Failure to certify completion of closure or post closure care.Failure to have PST installation certifications.Failure to complete deed recordation or deed certification in county deed records for contaminated areas.

Record Keeping10%

Failure to keep records or fail to have complete, accurate or available records on site.

AirFailure to maintain calibration logs or monitoring logsFailure to include all components on master component listFailure to maintain non-reportable emissions events logFailure to record CEMs data, temperatures, feed rates, coating and solvent usageFailure to record opacity readings in daily flare log

WaterFailure to adequately maintain records (includes no records and incomplete records) Failure to provide records of DMRs during investigationFailure to maintain registrations and authorizations on-site or in required vehiclesFailure to provide inventory of all industrial usersFailure to maintain up-to-date map of the public water system

WasteFailure to maintain an adequate operating recordFailure to maintain records of inspections, manifests or ground water analysis or waste analysis.Failure to maintain records related to the PST systems such as inventory control, registration, installationrecords, testing records, maintenance and service records, site assessment records etc.Failure to maintain a copy of the CARB order, testing and maintenance records.Failure to maintain required records of the number of lead acid batteries purchased and accepted, returnedetc.Failure to maintain required logs at scrap tire storage facilities.Failure to maintain required inspection records at MSW landfill.

Labeling5%

Failure to label or or properly label equipment, units, containers, tanks etc.

AirFailure to label Emission Points with EPNFailure to tag all LDAR components (valve, pump, etc.) in a unit


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WaterFailure to mark and identify all pump trucks for sludge transportersFailure to label tanks in storm water programFailure to mark all discharge valves and ports for sludge transportersFailure to place authorization stickers on motor vehiclesFailure to properly label chemical tanksFailure to properly identify pipes

WasteFailure to label a less than 90 day container or tank with the words “hazardous waste” or without thebeginning date of accumulationFailure to ensure that a tag, label or marking is applied to top of fill tube of each UST.Failure to post operating instruction on each dispenser equipped with a Stage II system.

Manifests ShippingPapers and TripTickets10%

Failure to use or maintain manifests, shipping papers or trip tickets as required.

AirN/A

WaterFailure to use trip tickets when transporting sludge wasteFailure to adequately complete trip ticket for sludge transports

WasteFailure to use or properly complete manifest or shipping papers, i.e. missing or incomplete information on manifests.Failure to return signed copies of manifest (for receiving facilities)Failure to maintain required manifests or shipping paper for waste shipments for remediation relatedactivities.Failure to use and maintain bill of ladens for shipments of used oil filters and manifests for scrap tires.

Permit/Licensing25%

Failure to apply for permit or license, renewal or amendment; operating without a permit or license

AirFailure to operate with a permit when a permit is requiredFailure to renew expired permit when requiredFailure to obtain a permit amendment for plant modificationsFailure to update Title V Permit when requirements change

WaterFailure to obtain a permit for a new facilityFailure to renew expired permit and continued to operateFailure to obtain a permit amendment for a modificationFailure to obtain a permit to discharge filter backwash waterFailure to obtain authorization prior to beginning construction of an OSSFFailure to possess current OSSF installer licenseFailure to obtain documentation that owner or agent has permitting authority’s permission to constructOSSFFailure to submit Edwards Aquifer protection plan or contributing zone plan and receive ED approvalFailure to obtain irrigator and/or installer license


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WasteFailure to obtain a permit or authorization prior to treatment or disposal of a hazardous waste on-site orextended or long term storage of hazardous waste.Failure to obtain a permit or other authorization for the acceptance of industrial and/or hazardous wastefrom off-site source. Failure to submit permit modifications to transfer hazardous waste permit to new owner at least 90 daysprior to scheduled change.Failure to ship waste to a permitted or authorized facility.

QualityControl/Analyses25%

Failure to follow required procedures and testing that ensure a safe product for employees, the public andthe environment.

AirFailure to conduct sampling on cooling towers or fuel gasFailure to perform required vehicle emissions test, stack test, performance testFailure to calibrate or test the calibration of an instrumentFailure to monitor temperaturesFailure to conduct opacity readingsFailure to have a monitoring system in place to record emissions or provide data to calculate emissionsFailure to calculate emissions

WaterFailure to test, inspect, stormwater sewer systems for non stormwater flowsFailure to monitor flow, disinfectant residualsFailure to conduct quarterly visual monitoring of stormwater dischargeFailure to collect samplesFailure to use industry accepted standards to obtain adequate measurementsFailure to calibrate flow-measuring device, pH meter, chlorine meter, etc.Failure to follow appropriate analytical procedures and monitoring plans

WasteFailure to complete hazardous waste determination or waste classification.Failure to complete required analysis and classification for land disposal restrictions.Failure to follow ground water sampling and analysis plan.Failure to conduct required tank or line tightness testingFailure to conduct required testing of cathodic protection equipmentFailure to complete adequate statistical inventory reconciliation (SIR) Failure to prepare a waste analysis plan.Failure to conduct proper or adequate analysis of ground water samples in accordance with ground watersampling and analysis plan.Failure to conduct integrity assessments for hazardous waste tanks.

General PreventativeMaintenance/Housekeeping5%

Failure to maintain conditions generally required by permit or rule which if followed or completed couldavoid or prevent more serious violations.

AirOpen containers, non-chemical spills

WaterRusted catwalksClimbing vegetation on electric panelDebris and trash around stabilization pond


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WasteFailure to maintain drums of industrial non hazardous waste closed with lids or in good condition, ie.(rusting dented etc.)General Prohibition (30 TAC 335.4) conditions which are not actual releases.Failure to maintain adequate aisle space for industrial non hazardous waste drumsFailure to maintain adequate freeboard in an industrial non hazardous waste surface impoundment.Failure to prevent erosion condition on a cover or slope for an industrial non hazardous waste landfill.

Operations andMaintenance25%

Failure to follow required operating procedures and methods that protect human health and theenvironment from pollution exposure.

AirFailure to maintain vehicle emission control devices or altering, bypassing vehicle emission controldevicesFailure to maintain car-seal valvesFailure to repair tears in baghouse bagsFailure to maintain electrical groundingFailure to meet stack height requirementsOperating a flare without a pilot flameExceeding limit rates for temperature, firing rate, pumping rate, usage rate, production limits, destructionefficiencyFailure to comply with manufacturer specifications or permit specificationsFailure to provide spare compressor


120

WaterFailure to properly cover bar screensFailure to provide self-contained breathing apparatus at treatment plantFailure to properly house chlorination facilities/ improper ventilation of chlorine facilitiesFailure provide backflow prevention deviceFailure to prevent livestock from grazing within lagoon systemFailure to provide liftstation with alarmFailure to maintain 2-foot freeboardFailure to properly waste sludge from Imhoff tankFailure to properly maintain treatment units (clarifiers, chlorine contact chambers, sludge digesters, etc.)Failure to comply with design, construction, and/or maintenance requirements for clear wells, stand pipes,pressure tanks, elevated tanks, clarifiers, pumps, and other treatment units or appurtenances Inadequate water line size or placementWater plant being operated by unlicensed operator or operator with inadequate licenseFailure to plug abandoned wellsFailure to provide adequate disinfection equipment or chemicalsFailure to provide all-weather access roadFailure to maintain adequate disinfectant residuals, turbidity levelsFailure to complete customer service inspectionsFailure to maintain liner in lagoons at CAFOFailure to maintain manure stock piles at CAFO to prevent run-offFailure to provide facilities to prevent runoff of wastewater or stormwater at CAFOFailure to maintain sight gauges on sludge truckFailure to stop construction of an OSSF when planning material or soil conditions make complianceimpossibleFailure to meet minimum specifications of OSSF installationFailure to construct OSSF authorized for specific location in site evaluationFailure to maintain required separation distances in OSSFFailure to meet minimum standards for design and installation of irrigation systemsFailure to comply with conditions of an Edwards Aquifer protection plan


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WasteFailure to ship hazardous waste off-site within 90 days or 180 days for a small quantity generator.Exceedance of storage time limit for universal waste rules, (generators, handlers etc.)Exceedance of time allowed to perform closure or to close.Exceeding the allowable volume or number of containers in a permitted hazardous waste containerstorage area.Failure to complete inspect hazardous waste facility for malfunctions, deterioration, operator errors anddischarges.Failure to have an adequate inspection schedule with required information for hazardous waste facilitiesFailure to conduct inspection on hazardous waste units, ie. tanks, container storage areas, landfills,ground water systems, etc.Failure to take adequate precautions for ignitable, reactive or incompatible wastesFailure to maintain an adequate ground water monitoring system.Failure to follow closure plan or post closure care planFailure to keep hazardous waste drums closed with lids,Failure to maintain containers of hazardous waste in good condition.Failure to maintain adequate freeboard for hazardous waste surface impoundment.Failure to perform investigation and confirmation steps in response to suspected releaseFailure to properly remove from service a PSTFailure to make available a valid current delivery certificateFailure to conduce inventory control or to conduct proper or adequate inventory controlFailure to ensure that release detection, corrosion protection and spill and overfill equipment is properlymaintained and operated properlyFailure to conduct required inspections on PST systems including cathodic protection equipment.Failure to maintain and properly operate Stage II components ie. torn or damaged nozzle boots, etc.Failure to conduct required inspections of the Stage II vapor recovery system.Failure to comply with training requirements for personnel involved with the Stage II systems.Failure to maintain required height and size requirements at scrap tire sites.Failure of a MSW landfill to follow closure and post closure care requirements.Failure to maintain proper cover requirements for MSW landfill.Failure to control windblown waste and litter.Failure to follow site operating plan.Failure to have an adequate personnel training program for hazardous waste sites.

Security/ EmergencyPreparedness25%

Failure to plan for fires, releases, emergencies, natural disasters, terrorist attacks, or other catastrophes bynot using required contingency plans or other required planning documents.

AirFailure to provide backup generator for major events or electrical failuresFailure to provide emissions reduction plan

WaterFailure to provide lockable gatesFailure to provide adequate intruder resistant fenceFailure to provide backup generator for electrical failure


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WasteFailure to prepare an adequate contingency plan.Failure to have a 24 hour surveillance system which monitors and controls entry to the active portion theof the facility.Failure to have a fence or natural barrier which completely surrounds the active portion of the facility;Failure to have a means to control entry at all times through gates, or other entrances.Failure to have a sign with the legend “Danger Unauthorized Personnel Keep Out.” Failure to have required emergency equipment i.e., alarms, fire extinguishers, fire control equipment,decontamination equipment, water at adequate pressure and volume.Failure to have required aisle space.Failure to make arrangements with local authorities.Failure to have an emergency coordinator.Failure to prepare Fire Protection Plan for MSW landfill

Construction,Capacity and Designrequirements25%

Failure to meet capacity, construction, and design requirements.

AirN/A

WaterFailure to provide adequate raw water pump capacityFailure to provide adequate water pressure throughout distribution systemFailure to provide adequate treatment plant capacity

WasteFailure to meet the design and construction requirement for landfills, drip pads, containment buildings,munitions and Explosive Storage, or tanks.Failure to have adequate secondary containment for hazardous waste tank.Failure to meet location standards for hazardous waste management units.Failure to install or construct required secondary containment for used oil handler facilities.Failure to install or properly construct required leachate collection and liners. Failure to meet location restrictions requirements for MSW landfill. Failure of MSW landfill to have required ground water monitoring system.Failure to install or properly install all components of a required Stage II system

Water Rights25%

Violations that concern state water rights.

Water RightsDiverting, taking, or storing water without a water rightDiverting, taking, or storing water above the authorized amountDiverting above the authorized diversion rateDiverting water for a use not specified in the water rightDiversion in excess of an authorization to divert, granted by a water master

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Financial Assuranceand PenaltyPayments25%

Failure to provide required financial assurance or pay administrative penalties required by a prior order.

AirFailure to pay administrative penalty from prior order.

WaterFailure to pay administrative penalty from prior order.

WasteFailure to maintain financial assurance for closure or post closure for hazardous waste site.Failure to provide for financial assurance for sudden and not sudden liability for hazardous waste site.Failure to update closure and post-closure cost estimates for inflation or addition of new hazardous wasteunits.Failure to provide financial assurance for corrective action and for third party compensation for bodilyinjury or property damage caused by accidental releases for PSTs.Failure to provide required financial assurance for municipal waste sites including landfills, tire sites, andused oil sites and others.

Documents

Penalty Policy Subcommittee - Tceq